Charge more for peak hour power: Montek

Consumers may soon have to pay a higher price for using power in the peak hours, if a suggestion of the Planning Commission is implemented.

Montek Singh Ahluwalia, the Commission’s deputy chairman, today suggested introduction of ‘time of day’ rates in the power sector, high in the peak hours of higher demand and lower in the off-peak ones. At the conference of all state power ministers today, he said, “The real issue is that the difference between peak and non-peak (be) sufficiently large to actually encourage a switch. This probably requires higher tariffs (rates) during the peak period and maybe even lower tariffs during non-peak periods.”

The move is bound to improve the financial health of distribution companies, which have accumulated losses of about Rs 70,000 crore in 2010-11. The Shunglu committee, looking into the financial health of power distribution companies, will give its report in August or September.

“The mismatch in tariffs and cost (of present pricing) is huge, which is likely to impact the sector, and this is not a viable model,” Ahluwalia said.

Union power secretary P Uma Shankar noted electricity distribution losses were expected to reach as much as Rs 1,16,000 crore by 2014-15. “Losses are seeing an upward trend... we have to improve the health of distribution companies,” he said.

The government has taken various initiatives, including a Restructured Accelerated Power Development and Reform Programme (R-APDRP), to reduce aggregate technical and commercial (AT&C) losses in distribution. About Rs 40,000 crore had already been spent on R-APDRP.

AT&C losses in the country are pegged in the range of 20 to 40 per cent (of generated power).

The target is to reduce the losses to 15 per cent.